Required: With respect to MFRS 136, Impairments of Assets, calculate the impairment loss for the machine for the year ended 31 December 2023. Show relevant workings.
Required: With respect to MFRS 136, Impairments of Assets, calculate the impairment loss for the machine for the year ended 31 December 2023. Show relevant workings.
Required: With respect to MFRS 136, Impairments of Assets, calculate the impairment loss for the machine for the year ended 31 December 2023. Show relevant workings.
Coco Sdn Bhd has a year end of 31 December and operates a factory which makes ceramic tiles. It purchased a machine on 1 July 2020 for RM80,000 which had a useful life of ten years and is depreciated on the straight-line basis, time apportioned in the years of acquisition and disposal. The machine was revalued to RM81,000 on 1 July 2021. There was no change to its useful life at that date. A fire at the factory on 1 October 2023 damaged the machine leaving it with a lower operating capacity. The accountant considers that Coco Sdn Bhd will need to recognise an impairment loss in relation to this damage. The accountant has ascertained the following information at 1 October 2023: i. An equivalent new machine would cost RM90,000. ii. The machine could be sold in its current condition for a gross amount of RM45,000 with a dismantling cost of RM2,000. iii. In its current condition, the machine could be used for three more years which gives it value in use of RM38,685. Required: With respect to MFRS 136, Impairments of Assets, calculate the impairment loss for the machine for the year ended 31 December 2023. Show relevant workings.
Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video
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